Business

Oldest Swiss bank to close after guilty to US tax evasion plea

ZURICH - The oldest Swiss bank, Wegelin & Co, is wrapping up an existence that has spanned more than 270 years after pleading guilty in a US case involving Americans who hid funds in secret accounts abroad.

Wegelin, which was founded in 1741 and based in St. Gall, eastern Switzerland, unveiled late Thursday an agreement with US federal prosecutors in New York that includes penalties worth a total of US$57.8 million (44 million euros) for helping wealthy individuals avoid at least US$20 million in taxes.

"Wegelin was aware that this conduct was wrong," said Otto Bruderer, one of the bank's managing partners, as he entered a guilty plea on behalf of the bank to one count of conspiracy.

"However, Wegelin believed that, as a practical matter, it would not be prosecuted in the United States for this conduct because it had no branches or offices in the United States and because of its understanding that it acted in accordance with, and not in violation of, Swiss law and that such conduct was common in the Swiss banking industry," he added.

The bank had carried out operations in the United States via an account with UBS, and the case marked the first time that US justice officials have charged a bank, rather than individuals, as part of a crackdown on overseas tax evasion, Dow Jones Newswires said.

US Attorney for the Southern District of New York Preet Bharara called the agreement a "watershed moment in our efforts to hold to account both the individuals and the banks — wherever they may be in the world — who are engaging in unlawful conduct that deprives the US treasury of billions of dollars of tax revenue".

According to the Wall Street Journal, the court could sentence the Swiss bank on March 4, formally endorsing the agreement and putting an end to further prosecution of Wegelin in the United States.

Wegelin had essentially stopped operating as a bank in late January 2012 to focus on the US case.